Previously, I wrote an article on buying and monitoring our investments, rather than simply “buying and holding”. Staying alert and vigilant is an important aspect of investing as it protects an investor from sudden shocks and also allows him to be able to react to negative news or adverse events.
Vigilance is defined as being aware and alert to what’s happening in the business world. Investors need to constantly stay abreast of the latest trends and events so that they are equipped with the right skills and knowledge to invest well. With this knowledge, they would then know how to react to events which impact their portfolio. Armed with this knowledge and together with a proper investment framework, the investor would then be able to make optimal decisions regarding his portfolio.
How alert should you be?
Investors may wonder — exactly how “alert” should I be? After all, one cannot spend most of their waking hours monitoring and checking on their portfolio companies, as this would not be an efficient or practical use of time. Periodic monitoring of our portfolio companies would suffice, and for myself, I do check SGXNet once a day for any announcements relating to my portfolio companies and also do general reading.
Alertness also refers to being aware of what you should be looking out for, and not just being alert for the sake of it. Investors need to be able to zoom in on news or trends which may have a significant impact on their investments, and filter out the bulk of news which is just “good to know” but would not have a material effect.
The punishment for dozing off
The penalty for being lazy and “dozing off” on your investment portfolio can be harsh. There have been many reported cases of investors who simply allowed their portfolio to languish without even checking on the health of the underlying companies, and this eventually resulted in debilitating losses.
As investors, we should not automatically assume that companies are “safe” just because they may be blue-chip companies or government-linked corporations. Due to the nature of business and also risks relating to politics, regulations and laws, any business may experience a structural and material decline, and investors need to be mindful of this.
The Foolish bottom line
Vigilance is an essential aspect of active portfolio management. Investors who stay alert would be quick to react to negative events and also be more equipped with the right psychology and knowledge to react to them properly.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.